N.J. Democrats hope legalizing marijuana will boost state finances

Published: Sep 15, 2017, 8:00 am • Updated: Sep 15, 2017, 8:00 am

By Elise Young, Bloomberg

New Jersey reaped billions from slot machines and blackjack tables in the decades before casino fever jumped state lines. With Atlantic City’s gambling heyday now past, politicians in the Garden State are aiming to grab marijuana’s riches while neighbors again play catch-up.

Democrat Phil Murphy, with a 25 percentage-point lead in New Jersey’s race for governor, has vowed to legalize recreational pot statewide, and has support from key lawmakers likely to win re-election in November. His Republican challenger, Kim Guadagno, has said she favors decriminalizing the drug, even after serving almost eight years as lieutenant to term-limited Gov. Chris Christie, who condemns casual marijuana use and calls its profits “blood money.”

Beyond the political will and public opinion favoring legalization, New Jersey has a financial incentive to beat New York and Pennsylvania for access to a legalized market where North American consumers spent $6.7 billion in 2016. Its pension system is the least-funded among states, and annual payments are increasing pressure on its budget. New Jersey’s key indicators will trail the nation’s significantly through 2026, with slowing population and job growth, according to a July report by Rutgers University’s Economic Advisory Service.

“It’s the next opportunity for what I see as an employment boom in New Jersey,” said Democratic State Sen. Nick Scutari, whose weed legalization bill had hearings in June, with the understanding that it would be fine-tuned before any voting early next year. Another proposal, by Democratic Assemblyman Reed Gusciora, would ask voters to permit pot just in Atlantic City.

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Marijuana is outlawed federally, and in New Jersey possession is punishable by a $1,000 fine and six months in jail. More than two dozen states, though, including New Jersey, allow consumption for medical purposes, and recreational use is law in Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon and Washington.

In August, Sen. Cory Booker, a New Jersey Democrat, introduced a bill to legalize the drug nationally, even as the Trump administration remains opposed and his Republican Party controls Congress.

The New Jersey Libertarian Party last year issued a statement on April 20 — international “Weed Day” — declaring that in legalized states, predictions about higher crime and the spread of more powerful drugs haven’t panned out. State chapter leaders of the National Association for the Advancement of Colored People and the Latino Action Network told lawmakers in Trenton that minority users are disproportionately penalized, with lives derailed by convictions for what often were youthful indiscretions. Legal experts, including a county prosecutor, testified that enforcement funding would be better spent on public safety.

Fifty-nine percent of New Jerseyans support possession for adult personal use, according to a Quinnipiac University poll of 1,121 registered voters surveyed from Sept. 7-12. The poll had a margin of error of plus or minus 4 percentage points.

The state’s sentiment on pot legalization is similar to the 61 percent of Americans who backed it in a CBS News poll conducted in April. Two years earlier, 51 percent supported it. In 1979, eight years after then-President Richard Nixon declared illicit drugs to be “public enemy No. 1,” just 27 percent favored.

Murphy, running for governor after serving as U.S. ambassador to Germany and a Goldman Sachs executive in Hong Kong and Frankfurt, told a town hall crowd in Lambertville in February that he was “all in to legalize marijuana” on justice merits alone. The financial boost, he said, was a sweetener.

“God knows we need every penny we can find,” Murphy said. “That’s $300 million to $500 million we don’t have at the moment that we could use.”

New Jersey used to count on Atlantic City for instant cash during the decades it was the nation’s second-biggest gambling market behind Las Vegas. Casino revenue peaked in 2006, though, and slid for the next 10 years as gambling came to New York and Pennsylvania, forcing New Jersey to shed five of 12 casinos and 11,000 jobs. Last year, the state tax take was $237 million, just 57 percent of the best year’s payout.

New Jersey lawmakers saw a way to undo that damage and then some on a tour of Colorado growers and retailers last year, when that state collected $157 million in taxes on pot sales.

“Colorado went from 40th in job growth to No. 4,” said Senate President Steve Sweeney, a Democrat from West Deptford who was on the trip. “It’s becoming one of the youngest states in the nation — they have a growth explosion because people are moving there.”

In Pennsylvania, marijuana-related prosperity like that is years off, according to Democratic State Rep. Edward Gainey of Pittsburgh. He sponsored the medical-use bill signed by Gov. Tom Wolf in April 2016, more than three years after New Jersey dispensaries started supplying the drug to patients.

“It’s too soon for businesses and lobbyists to come in” to advocate for another major marijuana law change, Gainey said in an interview. “Decriminalization would be one step before legalization.”

New York Gov. Andrew Cuomo, a Democrat in a state with a divided legislature, in January proposed decriminalizing marijuana possession, though he remains opposed to legalizing recreational use. State Sen. Liz Krueger, a Democrat from Manhattan who has unsuccessfully pitched a recreational bill three times, said any progress New Jersey makes is likely to push New York.

“It’s not a structural ‘How-the-hell-would-you-do-it?’ legislation,” Krueger said in an interview. “The public is ahead of the political comfort level here.”

In New Jersey, lawmakers and lobbyists said the goal is to have legislation signed within the first 100 days of what they presume will be a Democratic administration. Sales would start about a year later, with particular focus on what other states are doing.

“It’s about the importance of having the right-size market, so you don’t grow so big that you can’t serve the community you seek,” said Scott Rudder, a former Republican state assemblyman who is president of the New Jersey Cannabusiness Association, a trade group. “We saw that with the downsizing of the casino industry. Whatever the blueprint turns out to be in New Jersey, it has to be something that can provide a stable economy from a jobs-, tax base- and revenue-planning perspective.”

Topics: legalization, New Jersey, recreational, state taxes